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Judgment
P. Murgesen, J.—This appeal has been filed against the order dated 23.05.2007 made in W.P. No. 10057 of 2006 on the file of this Court.
The brief facts arising out of this writ appeal are as under:
The appellant was working as Attender from 01.04.1984 to 06.07.1989 and he was also working as Maistry from 01.02.1995 to 31.03.1998 in
the Bangalapatti Adi Dravidar Welfare Brick Workers Industrial Co-op. Society, Periyakulam. The appellant was terminated from service on
06.07.1989 stating that the management of the Bangalapatti Adi Dravidar Welfare Brick Industrial Co-op. Society was not functioning. Against the
termination of his service, he filed I.D. No. 188 of 1991 before the Labour Court, Madurai and the same was ended in favour of the appellant.
Subsequently, the Government had issued G.O.(D) No. 719 dated 22.06.1995 to prosecute the respondent-Management. Subsequent to this, the
appellant was again appointed as Maistry with effect from 01.02.1995, wherein the appellant had served nearly a period of three and half years.
Thereafter he was terminated from service stating that the said Society was not functioning. As against the same, the appellant raised a dispute in
I.D. No. 185 of 1998 on the file of the Labour Court, Madurai and the same was disposed of by an Award dated 30.10.1998 wherein the
request of the appellant for reinstatement was rejected. However, the Labour Court had held that the appellant is entitled for a compensation of
Rs. 2,500/- per year for three years; thus the appellant was awarded a sum of Rs. 7,500/- as compensation and also salary arrears of Rs. 1,492/-
was ordered, i.e., the appellant was entitled for a total sum of Rs. 8,992/-. Against the same, the appellant had filed W.P. No. 10057 of 2006
before this Court and the same was dismissed by order dated 23.05.2007. Challenging the order of the learned Single Judge, the present appeal
has been preferred by the appellant.
Admittedly, the Society in which the appellant was employed, is not functioning. The Additional Commissioner of Industries and Commerce, by
his Proceedings in RC No. 27258/96/ICN1 dated 22.2.1999 appointed an Official Liquidator to realize the assets of the Society and discharge
the liabilities, in accordance with the norms and priorities set out by the Registrar of Industrial Co-op. Societies.
The stand of the appellant is that the mandatory provisions of Section 25F of the Industrial Disputes Act, 1947 and Section 5(2) of the Payment
of Wages Act, 1936 were not followed. Further he would submit that he was not given notice about the closure of the Society and therefore, it is a
violation of Rule 149(2) of Tamil Nadu Co-operative Societies Rules, 1988.
The first claim of the appellant is that Section 25-F of the Industrial Disputes Act, 1947 was not followed. Relying on this Section, the appellant
argued that the termination of service is not in accordance with law and that therefore, his termination should be declared as illegal. Section 25F of
the Industrial Disputes Act, reads as follows:
25-F. Conditions precedent to retrenchment of workmen.-No workman employed in any industry who has been in continuous service for not less
than one year under an employer shall be retrenched by that employer until-
(a) the workman has been given one month''s notice in writing indicating the reasons for retrenchment and the period of notice has expired or the
workman has been paid in lieu of such notice, wages for the period of the notice:
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days'' average pay for every
completed year of continuous service or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government
by notification in the Official Gazette.
How far and to what extent the provisions of Section 25F would apply in case of transfer of undertaking or closure thereof is the question
involved in this appeal. The appropriate provision which would govern the case of the appellant is Section 25FFF, the relevant part whereof is
extracted and reproduced below:
25-FFF.Compensation to workmen in case of closing down of undertakings.-(1) Where an undertaking is closed down for any reason
whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure
shall, subject to the provisions of Sub-section (2), be entitled to notice and compensation in accordance with the provisions of Section 25F, as if
the workman had been retrenched:
Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the
compensation to be paid to the workman under Clause (b) of Section 25F shall not exceed his average pay for three months.
Explanation.-An undertaking which is closed down by reason merely of-
(i) financial difficulties (including financial losses); or
(ii) accumulation of undisposed of stocks; or
(iii) the expiry of the period of the lease or licence granted to it; or
(iv) in a case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on,
shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the
proviso to this sub-section.
1-A....
1-B....
(2) Where any undertaking set-up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on
account of the completion of the work within two years from the date on which the undertaking had been set-up, no workman employed therein
shall be entitled to any compensation under Clause (b) of Section 25F, but if the construction work is not so completed within two years, he shall
be entitled to notice and compensation under that Section for every completed year of continuous service or any part thereof in excess of six
months.
A plain reading of the provisions contained in Section 25FF and Section 25FFF leaves no manner of doubt that Section 25F thereof is to apply
only for the purpose of computation of compensation and for no other purpose. The expression ""as if"" used in Section 25FF and Section 25FFF is
of great significance. The said term merely envisages computation of compensation in terms of Section 25F and not the other consequences flowing
therefrom. Once a valid transfer or a valid closure comes into effect, the relationship of employer and employee does not survive and ceases to
exist. Compensation is required to be paid to the workman as a consequence thereof and for no other purpose.
It is significant that in case of transfer of an undertaking or closure of an undertaking in accordance with the aforesaid provisions, the benefit
specifically given to the workmen is ''as if the workmen had been retrenched'' and this benefit is restricted to notice and compensation in
accordance with the provisions of Section 25F.
In the present case, the Undertaking was not in existence and a Liquidator was appointed. The closure of the Undertaking is also not disputed
by the appellant. The Hon''ble Supreme Court in Maruthi Udyog Ltd. v. Ram Lal reported in (2008) 2 SCC 638, has pointed out the applicability
of Sections 25F and 25-FFF of the Industrial Disputes Act. In that case, the Hon''ble Supreme Court has held that both Section 25FF and 25FFF
provide for payment of compensation only, in case of transfer or closure of the Undertaking in the manner set out in Section 25F of the Industrial
Disputes Act. Paragraphs 21, 25, 26 and 35 of the said decision is relevant for our present purpose which reads as under:
How far and to what extent the provisions of Section 25F of the 1947 Act would apply in case of transfer of undertaking or closure thereof is
the question involved in this appeal. A plain reading of the provisions contained in Section 25FF and 25FFF of the 1947 Act leaves no manner of
doubt that Section 25F thereof is to apply only for the purpose of computation of compensation and for no other. The expression ""as if"" used in
Section 25FF and Section 25FFF of the 1947 Act is of great significance. The said term merely envisages computation of compensation in terms
of Section 25F of the 1947 Act and not the other consequences flowing therefrom. Both Section 25FF and Section 25FFF provide for payment
of compensation only, in case of transfer or closure of the undertaking. Once a valid transfer or a valid closure comes into effect, the relationship of
employer and employee does not survive and ceases to exist. Compensation is required to be paid to the workman as a consequence thereof and
for no other purpose.
***
Once it is held that Section 25F will have no application in a case of transfer of an undertaking or closure thereof as contemplated in Sections
25F and 25FFF of the 1947 Act, the logical corollary would be that in such an event Section 25H will have no application.
The aforementioned provisions clearly carve out a distinction, that although identical amount of compensation would be required to be paid in
all situations but the consequence following retrenchment u/s 25F of the 1947 Act would not extend further so as to envisage the benefit conferred
upon a workman in a case falling u/s 25FF or 25FFF thereof. The distinction is obvious inasmuch as whereas in the case of retrenchment
simpliciter a person loses his job as he becomes surplus and, thus, in the case of revival of chance of employment, is given preference in case new
persons are proposed to be employed by the said undertaking; but in a case of transfer or closure of the undertaking the workman concerned is
entitled to receive compensation only. It does not postulate a situation where a workman despite having received the amount of compensation
would again have to be offered a job by a person reviving the industry.
***
In construing a legal fiction the purpose for which it is created should be kept in mind and should not be extended beyond the scope thereof or
beyond the language by which it is created. Furthermore, it is well known that a deeming provision cannot be pushed too far so as to result in an
anomalous or absurd position. The court must remind itself that the expressions like ""as if"" are adopted in law for a limited purpose and there
cannot be any justification to extend the same beyond the purpose for which the legislature adopted it.
In the present case, Section 25F(a) and (b) can be analysed for providing necessary relief to the appellant. Section 25F (a) and (b) provides
for entitlement of compensation to a workman who has been in continuous service for not less than one year and who is retrenched by the
employer, until the workman has been given one month''s notice in writing indicating the reasons for retrenchment or the workman has been paid
one month''s wages in lieu thereof as well as compensation, the amount whereof shall be equivalent to fifteen days'' average pay for every
completed year of service or any part thereof in excess of six months.
In the case of S.M. Nilajkar and Others Vs. Telecom, District Manager, Karnataka, , the Hon''ble Supreme Court has pointed out that the
proper provision that would govern in the case of closure of undertaking is Section 25FFF.
The appellant also relied on the judgments reported in 2007(4) LLN 91, Vikramaditya Pandey Vs. Industrial Tribunal and Another, , Deep
Chandra Vs. State of U.P. and Another, and 2008(3) LLN 654, and stated that he is entitled for reinstatement. It is not in dispute that the
undertaking has already been closed. When there is a closure of undertaking, the question of reinstatement does not arise. Therefore, the above
judgments relied on by the appellant is not applicable to the present case. Also, the judgment of the Hon''ble Supreme Court in the case of Maruti
Udyog Ltd. v. Ram Lal, cited supra is squarely applicable to the facts of the present case.
In the case on hand, the appellant was employed afresh as a Maistry w.e.f. 01.02.1995 and his service came to be terminated on 31.03.1998.
Thus, the appellant has put in three years and one month of service with the third respondent. By the impugned Award, the Labour Court after
holding that the appellant''s prayer for reinstatement cannot be countenanced, held that he is entitled to compensation of Rs. 2,500/- per year for
three years. The compensation based on the total service was also arrived at a sum of Rs. 7,500/-. The salary arrears claimed by the appellant in a
sum of Rs. 1,492/- payable for the month of March, 1998 was also awarded. A total sum of Rs. 8,992/- was directed to be paid by the
management to the appellant. The Labour Court also rejected the claim of the appellant for payment of a sum of Rs. 2,00,000/- by way of
compensation. After the Award, the appellant has also received a sum of Rs. 8,992/- though without prejudice to his rights.
Inasmuch as we have held that due to the closure of the third respondent Society, which is not disputed by the appellant, the third respondent
is liable to comply with the stipulations contained in Section 25FFF of the Industrial Disputes Act, which in turn would attract compliance of
Section 25F which postulates payment of compensation to be worked out as if it is one of retrenchment, the appellant by virtue of the termination
dated 31.03.1998, was only entitled to compensation at the rate of 15 days average pay for every completed year of service apart from one
month notice pay. Even according to the appellant, as per the claim statement filed by him before the Labour Court in I.D. No. 185/1998, he was
entitled for basic pay of Rs. 865/- along with dearness allowance of Rs. 427/- and other allowance of Rs. 200/- in all a sum of Rs. 1,492/- as his
last drawn pay. However, the Labour Court has calculated the compensation payable to the appellant u/s 25F of the Industrial Disputes Act at the
rate of Rs. 2,500/- per year of service which was far exceeding the rate prescribed under the said provision. If the compensation and notice pay is
calculated at the rate of Rs. 1,492/- per month, it would workout to a sum of Rs. 3,730/- in all. The Labour Court however granted a liberal
compensation which is in fact more than double the compensation which would have actually been payable to the appellant under the provisions of
the Industrial Disputes Act. Even the salary arrears alleged to be payable for the month of March, 1998 was also directed to be paid by the third
respondent Society, which has been duly paid by the Society which was admittedly received by the appellant, though without prejudice. In the light
of our conclusion, about the applicability of Section 25F vis-a-vis Section 25FFF to the case on hand, we are convinced that the Award of the
Labour Court in ordering payment of compensation of Rs. 7,500/- to the appellant along with the salary arrears of Rs. 1,492/- for the month of
March, 1989 was perfectly justified. The rejection of the appellant''s claim for reinstatement and payment of compensation of Rs. 2,00,000/-
cannot therefore be found fault with.
The next contention raised by the appellant is that the amount was not paid as per Section 5(2) of the Payment of Wages Act. What would be
the result if Section 5(2) of the Payment of Wages Act is not followed, has to be decided in the present case. Section 5(2) of the Payment of
Wages Act, reads as follows:
Where the employment of any person is terminated by or on behalf of the employer, the wages earned by him shall be paid before the expiry of the
second working day from the day on which his employment is terminated:
Provided that where the employment of any person in any establishment is terminated due to the closure of the establishment for any reason other
than a weekly or other recognised holiday, the wages earned by him shall be paid before the expiry of the second day from the day on which his
employment is so terminated.
The contention of the appellant was that there is a statutory compulsion under the proviso to Section 5(2) that the wages earned by the
employee should be paid before the expiry of the second day from the day on which the employment ceases and since the salary of the appellant
for the month of March, 1998 was factually not paid in accordance with the said provision, the very termination dated 31.03.1998, should be held
to be illegal. We are unable to accept the said contention of the appellant for more than one reason. In the first place, the above referred to
provision of the Payment of Wages Act, does not state that the failure to pay the wages on the expiry of the second day from the day on which the
employee is terminated would by itself vitiate the order of termination. The object of the said provision is only to ensure that wages of an employee
earned by him is paid in time. If for any reason, the employer fail to pay the wages in time, the employee has been provided with a remedy to move
the appropriate authority for recovery of such wages with interest and penalty u/s 15(2) of the Payment of Wages Act. It is however relevant to
mention that for invoking the said remedy a period of limitation has been provided. There is also a provision contained therein for condonation of
delay in working out the said remedy. Having regard to the above said legal position as regards the implication of Section 5(2) and the
consequential remedy provided u/s 15(2) of the Payment of Wages Act, we are not inclined to accept the contention of the appellant in challenging
the order of termination on that ground.
The last contention of the appellant is that by virtue of Rule 149(2)(ii) of the Tamil Nadu Co-operative Societies Rules, 1988, the appellant
should have been accommodated in any of the other Co-operative Societies in the State of Tamil Nadu. At the outset, we wish to state that the
said contention of the appellant is based on a total misreading of the very Rule. For better appreciation of the contention, the said part of Rule
149(2) is extracted, which reads as under:
No appointment by direct recruitment to any post shall be made except by calling for a list of eligible candidates from the Employment Exchange
and also giving due publicity by means of announcement in the notice board of the society and also of the affiliated societies, inviting application
from the eligible employees of such societies. Where the Employment Exchanges issues a non-availability certificate, the society shall invite
applications by giving advertisement in more than one daily newspaper in which one should be in regional language having wide circulation
throughout the State:
Provided that the above stipulation shall not apply-
(i) to the appointment made on compassionate grounds;
(ii) for the absorption of surplus employees of other co-operative societies;
(iii) to the posts for which a Recruitment Bureau has been constituted u/s 74 of the Act or in respect of which a common cadre of service has been
constituted u/s 75 of the Act.
The main part of the said Sub-rule only states as to how and in what manner any appointment by direct recruitment to any Society governed by the
provisions of the Act and the Rules can be made. Clause (ii) falling under the proviso to Sub-rule (2) is only by way of an exception. In other
words, under the substantive part of Sub-rule (2) of Rule 149, it is stipulated that any appointment by way of direct recruitment can be resorted to
only in a particular manner and by way of an exception, it is stated that such restriction contained in the said substantive part of Sub-rule (2) will
not apply if it is by way of absorption of surplus employees of other Co-operative Societies. From the said proviso contained in Rule 149(2)(ii) it
cannot be held that as a matter of law or course, it is incumbent upon any other Co-operative Society in the State of Tamil Nadu to absorb surplus
employees of other Societies should be made as is contended by the appellant. Such a contention being wholly misconceived, we do not find any
merit in the said contention.
Accommodation of the appellant in a Co-operative Bank also does not arise and it has been elaborately dealt with in the writ petition by the
learned Single Judge, as it is a separate entity. In Paragraph-7 of the order, the learned Single Judge has pointed out that, as far as the Tamil Nadu
Industrial Co-operative Bank Ltd., Chennai is concerned, it is a separate entity and the officer/Liquidator incharge of the Tamil Nadu Industries
Co-operative Bank, has been posted as a liquidator of the Society and as such, the question of accommodating the appellant in any branch of the
Tamil Nadu Industries Co-operative Bank Ltd., Chennai does not arise at all, which we feel, does not require any interference by this Court.
There is another ground to hold that the claim of the appellant is not sustainable. The order in I.D. No. 185 of 1998 was challenged by the
Bangalapatti Adi Dravidar Brick Workers Industrial Co-operative Society, represented by its Official Liquidator/Assistant Director of Industries &
Commerce, Tamil Nadu Industrial Co-operative Bank Ltd., Chennai, in W.P. Nos. 10415 to 10417 of 2005. The writ petitions were dismissed
by order dated 21.11.2005 by the learned Single Judge. Challenging the same, appeals were preferred in W.A. Nos. 507 to 509 of 2005. In the
writ appeals, the Division Bench of this Court only extended the time by two months to enable the appellant therein to disburse the amount to the
workman as per the award passed by the Labour Court dated 27.02.2006. Now, in the present case, the appellant challenges the very same
Award passed in I.D. No. 185 of 1998. In view of the decision of the Division Bench of this Court dated 27.02.2006 in W.A. Nos. 507 to 509 of
2005, the Award in I.D. No. 185 of 1998, having got merged with the order in Writ Appeal, the appellant cannot raise any relief in this Writ
Appeal. For this reason also, the claim of the appellant is not sustainable.
For all the above reasons, we are of the considered view that the Award of the Labour Court dated 27.02.2006 passed in I.D. No. 185/1998
as well as the order passed by this Court in W.P. No. 10057 of 2006 dated 23.05.2007, does not require any interference by this Court and
accordingly the Writ Appeal fails and the same is dismissed. No costs.